Frontier Communications 2010 Annual Report Download - page 74

An analysis of the activity in the allowance for doubtful accounts for the years ended December 31, 2010,
2009 and 2008 is as follows:
Allowance for doubtful accounts
Balance at
beginning of
Period
Charged to
bad debt
expense*
Charged to other
accounts—
Revenue Deductions
Balance at
end of
Period
Additions
2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $32,748 $31,700 $ 2,352 $(26,675) $40,125
2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,125 $33,682 $ (6,181) $(37,455) $30,171
2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30,171 $55,161 $14,873 $(26,634) $73,571
*Such amounts are included in bad debt expense and for financial reporting purposes are classified as a
reduction to other revenue.
We maintain an allowance for estimated bad debts based on our estimate of our ability to collect accounts
receivable. Bad debt expense is recorded as a reduction to revenue.
(6) Goodwill and Other Intangibles:
The components of goodwill at December 31, 2010 and 2009 are as follows:
($ in thousands) 2010 2009
Goodwill................................................... $6,292,194 $2,642,323
Goodwill by reporting unit (operating segment) at December 31, 2010 is as follows:
($ in thousands) . . . . . . . . . . . . . . . . . . . . . . . . Northeast Southeast West Central Midwest
Reporting Units
Goodwill . . . . . . . . . . . . . . . . . . . . . . . $1,098,211 $1,275,633 $1,525,687 $1,576,898 $815,765
The components of other intangibles at December 31, 2010 and 2009 are as follows:
($ in thousands) 2010 2009
Other Intangibles:
Customer base ............................................ $2,702,409 $ 270,309
Software licenses.......................................... 105,019 —
Trade name and license. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,285 134,680
Other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,942,713 404,989
Less: Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . (451,518) (157,462)
Total other intangibles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,491,195 $ 247,527
Amortization expense was $294.1 million, $114.2 million and $182.3 million for the years ended
December 31, 2010, 2009 and 2008, respectively. Amortization expense for 2010 included $237.8 million for
intangible assets (primarily customer base) that were acquired in the Transaction based on an estimated fair
value of $2.5 billion and an estimated useful life of nine years for the residential customer list and 12 years for
the business customer list, amortized on an accelerated method. Amortization expense for 2010, 2009 and 2008
included $56.3 million, $56.3 million and $56.0 million, respectively, for intangible assets (customer base and
trade name) that were acquired in the acquisitions of Commonwealth Telephone Enterprises, Inc.
(Commonwealth), Global Valley Networks, Inc. and GVN Services (together GVN). Amortization expense
for 2009 and 2008 also included $57.9 million and $126.3 million, respectively, for amortization associated
with certain Frontier legacy properties, which were fully amortized in June 2009. As of December 31, 2009,
$263.5 million was allocated to the customer base (five year life) and $10.3 million to the trade name (five year
life) acquired in the Commonwealth acquisition, and $7.0 million to the customer base (five year life) and $0.3
million to the trade name (five year life) acquired in the Global Valley acquisition. Amortization expense,
F-15
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements